ECON 211 FINAL

12. For a monopolist, marginal revenue is

less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.

9. Which of the following is a characteristic of a natural monopoly?

Average total cost declines over large regions of output.

Game theory is important for understanding which market type?

Oligopolistic but not perfectly competitive

Which of the following is a characteristic of a monopoly?

barriers to entry

8. The fundamental source of monopoly power is

barriers to entry.

15. A monopolistically competitive market has characteristics that are similar to

both a monopoly and a competitive firm.

17. For a profit-maximizing monopolistically competitive firm, marginal revenue equals marginal cost in

both the short run and the long run.

18. Which of the following is not a key feature of monopolistic competition?

c. Positive economic profits for firms in the long run

11. Monopolies use their market power to

charge a price that is higher than marginal cost.

An agreement among firms in a market about quantities to produce or prices to charge is called

collusion

10. When a firm operates under conditions of monopoly, its price is

constrained by demand.

In an oligopoly, each firm knows that its profits

depend on both how much output it produces and how much output its rival firms produce.

An agreement between two duopolists to function as a monopolist usually breaks down because

each duopolist wants a larger share of the market in order to capture more profit.

14. A monopoly is an inefficient way to produce a product because

it produces a smaller level of output than would be produced in a competitive market.

13. A reduction in a monopolist's fixed costs would

not affect the profit-maximizing price or quantity.

16. When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost

there is a deadweight loss to society.